Congress is planning to vote on HR 1911, the Smarter Solutions for Students Act, in just two days. The bill, which is intended to reduce the cost of student loan payments, was introduced last week by Reps. John Kline (R-MN) and Virginia Foxx (R-NC).
The bill is the Republican solution to keep the student loan interest rates from doubling on July first. But the promises that the legislation makes are uncertain at best – and misleading at worst.
First, the bill promises to lower student loan interest rates by allowing these rates to mirror market rates. Basically, interest rates would change unpredictably over time. Rates could and probably will decrease in the short term and make loan payments less expensive – but they are projected to rise within a few years, and there’s no telling what will happen to market interest rates in the long term.
By the time this Fall’s new college freshmen graduate and make their first loan payments, interest rates could be frustratingly high – around 7.4%. Students are already surprised by the amount of debt they accumulate during college. Imagine how high their anxiety will be when their loan payments after graduation suddenly and unexpectedly increase.
To prevent unpredictable fluctuating interest rates, the bill proposes a cap, letting the student loan interest rates mirror market rates only until a certain point. Unfortunately, this cap is incredibly high. If students were to pay off loans using the capped rates, they’d be paying 8.5 percent on undergraduate loans and 10.5 percent on graduate loans. Students would be better off letting interest rates double to 6.8% on July 1.
Rep. George Miller (D-CA) and many of his Democratic colleagues on the House Education and Workforce Committee have spoken out against the Kline/Foxx bill, saying it is exactly the wrong solution for the nation’s students and families, and that it would actually make college more expensive. Here’s a video that explains how much damage the bill could inflict if passed:
Other groups have also voiced their concerns about HR 1911. The Education Trust and The Institute for College Access and Success issued a joint statement explaining why this plan is not what’s best for students:
“With family incomes stagnating and student debt at record levels, we must do more to make college affordable. High-cost, variable-rate, federal student loans do not make college more affordable. Instead, they make it impossible to know what the loan will cost down the line and could lead more students to turn to risky private loans instead. Federal student loans must be affordable and remain affordable so that students of all backgrounds can get to and through college.”
The I AM NOT A LOAN campaign is calling for folks to take action and sign a petition speaking out against the Republican “fix” for student loan interest rates. Here’s the link to take action.
Or, to act more quickly, you can also call 202-224-3121 to ask to speak to your Representative, and tell them to oppose this bill. (You can use this tool to find your member of Congress.)
Here’s a script you can use:
The Smarter Solutions for Students Act (H.R. 1911) is not at all a smart solution. The bill would make college MORE expensive and pile more debt onto students. It also would make it hard for students to know the interest rates on their loans because that rate would change every year.Once you’ve called, let us know what your Representative’s office said by using this form to report on your conversation.
Americans already owe over $1 trillion dollars in student debt. Going to college shouldn't mean a lifetime of crushing student loans, and H.R. 1911 would worsen the situation -- not make it better.
Americans need a REAL fix to our student debt problem, not this! Please Vote "No!" on the Smarter Solutions for Students Act.
We’ll update you on what happens…